JGB's head into the close higher in a risk.....>

JGBS: JGB's head into the close higher in a risk off Asia session, futures last

up 8 ticks at 151.25. JGB futures gapped higher at the open after reports that

North Korea had launched missiles over Japan. Japanese officials say no damage

was done but see the test as an escalation of the North Korea threat. The gap

higher took JGB futures to the highest level since September 2016 and now puts

focus on 151.58 the October 28 low now resistance.

- The North Korea event was the main focus during the session, early data in the

form of July labour market and household spending figures were shrugged off. The

jobless rate held at 2.8%, while household spending was weak at -0.2% from 2.3%

in June and against an expected 0.7% gain. Analysts noted that the labour market

held its strong trend and that private consumption is often underestimated in

the spending data.

- The yield curve has twist steepened, the long end selling off as the MOF

conducts an enhanced liquidity auction in the 15.5-40 Year maturities, the sale

for Y400bln was taken down well. 10-Year yield last -0.3bp at 0.008. The BoJ

conduct final Aug purchases tomorrow in 5+ Year zones.